Givens: Budgeteda Actual A Patient days 27,000 26,000 B Pharmacy $120,000 $160,000 C Miscellaneous supplies $66,000 $77,500 D Fixed overhead costs $808,000 $880,000 1. Prepare a flexible expense estimate for variable costs. . Flexible budget estimate. Budgeted Flexible Actual Patient days 27,000 26,000 Cost per patient day $6.89 $9.13 Total cost $186,000 $237,500 2. Compute the volume variance. 3. Compute the cost variance. 4. Compute the per unit cost variance. 5. Is the unfavorable variance caused by the volume of patients or the cost of services?. Enter VOLUME or COST as your answer.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The administrator of Break-a-Leg Hospital is aware of the need to keep his costs down because he just negotiated a new capitated arrangement with a large insurance company. Below are selected planned and actual expenses for the previous month.
| Givens: | Budgeteda | Actual | ||||||||||
| A | Patient days | 27,000 | 26,000 | |||||||||
| B | Pharmacy | $120,000 | $160,000 | |||||||||
| C | Miscellaneous supplies | $66,000 | $77,500 | |||||||||
| D | Fixed |
$808,000 | $880,000 |
1. Prepare a flexible expense estimate for variable costs.
| . Flexible budget estimate. | Budgeted | Flexible | Actual | ||||||
| Patient days | 27,000 | 26,000 | |||||||
| Cost per patient day | $6.89 | $9.13 | |||||||
| Total cost | $186,000 | $237,500 |
2. Compute the volume variance.
3. Compute the cost variance.
4. Compute the per unit cost variance.
5. Is the unfavorable variance caused by the volume of patients or the cost of services?. Enter VOLUME or COST as your answer.
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